Capital gains tax (CGT) concessions for small business - overview

This information is current for the 2008-09 and later years.

This fact sheet provides an overview of the capital gains tax (CGT) concessions available for small business and the basic conditions you must satisfy to access the concessions.

The concessions reduce the capital gain on business assets that you must include in your assessable income.

You must first satisfy the basic conditions that apply to all the CGT concessions for small business. You must then satisfy any additional conditions that apply specifically to the individual concessions.

You can apply as many concessions as you are entitled to until the capital gain is reduced to nil. This choice allows you to achieve the best tax results for your circumstances.

There are rules about the order you apply the CGT small business concessions, any current year or prior year capital losses and the CGT discount. See Guide to capital gains tax concessions for small business.

Gains from depreciating assets A capital gain from the disposal of depreciating assets that have been used solely for income producing purposes is exempt from CGT. However, an assessable amount may arise under the depreciation provisions.

What are the CGT concessions?

There are four small business CGT concessions.

Small business 15-year exemption

If your business has owned an asset for 15 years and you are aged 55 years or over and are retiring, or if you are permanently incapacitated, you won't have an assessable capital gain when you sell the asset.

Small business 50% active asset reduction

You can reduce the capital gain on a business (active) asset by 50%.

Small business retirement exemption

A capital gain from the sale of a business asset will be exempt up to a lifetime limit of $500,000. If you are under 55 years of age, the exempt amount must be paid into a complying superannuation fund or a retirement savings account to obtain the exemption.

Small business rollover

If you sell a small business asset, you can defer your capital gain until a later year. This means you don't include the gain in your income until a change in circumstances causes a CGT event to happen that crystallises the gain - for example, you don't acquire a replacement asset within the required period, or you later sell that replacement asset or stop using it in your business. When a CGT event crystallises the gain you have previously deferred, all or part of the gain that you deferred becomes assessable.